The Melville House blog has a really interesting post about the future of Barnes & Noble that links off to this piece by Rick Aristotle Munarriz.

Barnes & Noble is coming off another dreadful quarter. Back out the Nook and its digital downloads and you’ll find that sales actually fell by 11% at its superstores and college bookstores. Unlike Amazon.com (AMZN), which is routinely profitable throughout the year, Barnes & Noble posted a wider-than-expected deficit.

Coming up short has been a recurring theme for Barnes & Noble. The struggling retailer has missed Wall Street’s profit targets in each of the past six quarters, with five of those periods resulting in larger-than-forecasted losses. Analysts see Barnes & Noble posting a loss for all of fiscal 2012. They see a return to profitability come fiscal 2013, but we’ve seen how the prognosticators have overshot the chain’s reality in the past.

We’re now heading into the seasonally potent part of the year for Barnes & Noble, but how many holiday shoppers do you really think will be crowding the registers when they know that books and gifts can be bought cheaper online? Besides, now that so many people own a Kindle — and to a lesser extent a Nook — why insult gift recipients with an actual hardcover book?

This isn’t necessarily all that surprising, and helps fuel my deep hope that the fall of Borders and the contraction B&N will lead to a rise in quirky, community-centric indie stores. That said, how fucked is it that Books-A-Million! (punctuation and strange capitalization all theirs) is expanding into 41 previous Borders locations, meaning that the Southern-based, fourth-rate chain will now be in 31 states, including Connecticut, Iowa, Maine, Michigan, New Hampshire, New York, South Dakota, and Wisconsin where they’re opening their first stores.

I know it’s terribly snobby to say this—especially considering I’ve only been in a single BAM! in my life—but it would be terribly sad if the only book chain left standing was this Wal-Mart inspired mess of a organization. I think they should be boycotted on extraneous exclamation point alone. (Says the guy who includes an average of 3 exclamation points per text and loves Los Campesinos! for the same textual over-exuberance.)

Now, it’s nothing new for Amazon.com to release sales information without any actual hard numbers (how many Kindles have been sold?), but this announcement in The Bookseller begs a explanation:

Amazon.com customers have bought more Kindle e-books than both hardback and paperback books combined for the top 10, 25, 100 and 1,000 bestselling books on Amazon.com over the last 30 days. [. . .]

Steve Kessel, senior vice-president of Amazon Kindle, said: “For the top 10 bestselling books on Amazon.com, customers are choosing Kindle books over hardcover and paperback books combined at a rate of greater than 2 to 1. Kindle books are also outselling print books for the top 25, 100, and 1,000 bestsellers—it’s across the board.”

As a good friend pointed out last night, with ebook sales making up less than 20% of a publisher’s total sales (probably much less than 20%), this seems not just inaccurate, but basically impossible. And to be honest, it just doesn’t feel right.

Which raises a few questions: Is there any mathematical explanation that could make these statements make sense? And if not, why release something like this?

My math skills are less than amazing, but these two perspectives (Amazon sold more ebooks than print one; Publishers sell four times more print books than e-versions) could be reconciled, if the great majority of print books were being sold by outlets other than Amazon, whereas almost all ebooks are going to the Kindle.

This does make some degree of sense. Since we’re talking about just bestsellers here (Kessel’s 2:1 statement only applies to the top 1,000 bestselling titles), Barnes & Noble, independents, and most crucially, non-bookstores (Costco, Sam’s Club, Target, etc.), will make up a much larger percentage of total print book sales than they would for a typical midlist title.

So, if we pretend for a moment that Amazon’s numbers aren’t bullshit, and that they control approx. 80% of the ebook market, this would mean that their market share for print book sales of bestsellers is less than 10%. (I think. Again, though I like math in theory, that theory is very abstract and far away from my life.)

To make this as concrete as possible, let’s pretend there’s a book that sells 1,000,000 copies total—both print and ebook version. Assuming ebook sales make up 20% of the total, this book sold 800,000 print versions, 200,000 ebook versions. And if Amazon controls 80% of the ebook market, then 160,000 of these ebooks were Kindle editions. And if the ebooks sold at a rate of 2:1 over print versions on Amazon, Amazon only sold 80,000 print editions, which is a pretty small portion of the print book market.

And if publishers are overestimating e-sales, and the real figure is closer to 10%, then Amazon accounts for even less of the print market.

Again, totally pulling these numbers out of my ass, and I’m probably miscalculating all over the place, but in trying to do whatever necessary to reconcile these two statements (ebooks 2:1 over print, ebooks are only 20% of a book’s total sales), Amazon looks a bit weaker than I would’ve expected.

So what does this mean? Well, one possible crack-pot interpretation is that Amazon is cannibalizing its own sales. That it would so much rather people buy the Kindle version (even at a loss), making money off of the device itself. (Digression: I was going to put “making money off of the device itself and complementary sales of other products,” but that’s a weird flaw in the Kindle-as-selling-tool argument. Amazon makes tons of cash off of spontaneous additional purchases: “I want Freedom . . . and a toaster!” But the Kindle is wedded to book purchases only. Interesting.)

And maybe this is a reflection on society itself. We’re so driving by instant satisfaction (I feel frustrated and delayed simply having to sign in to the U of R’s wifi every morning. Can’t this process be automatic so that I don’t have to wait 30 seconds to check my email?) that if we want a book, we want it now, meaning that we’ll buy it on our Kindle if we prefer the e-version, or in the checkout line of Wegmans if we’re print bound. Why wait for Amazon to ship it?

All this scares me deeply. For a Bulgarian novel contest that I’m judging (more on that later), I put a few of the pieces on our office Kindle and read them at home last night. It was fine, but to be honest, I mainly just wanted to check out what other books I could buy for the Kindle. (Especially since our Kindle is tied to Nate’s checking account.) I thought it sucked when the lines in the text were all jacked up, crankily complained via text messages about how this minor flaw made the sample feel even more ephemeral than it already did, etc., etc. In some ways, I feel like I’m all over this digital revolution or whatever, but in others I’m just as cranky and myopic as fricking Andy Rooney and think we should all slow down and spend more time actually reading rather than seeking out our next purchase.

As to the why of Amazon’s timing, that’s pretty obvious. Yesterday B&N announced the new version of the Nook which has a color touchscreen and is being positioned as a “reading tablet.” (Which is somewhere between a Kindle e-reader and an iPad tablet.) It does look pretty cool, and might actually satisfy the needs of a particular group of customers. Rather than compete on products, it does make more sense for Amazon to come out with a bad-ass statement about how many ebooks they’re selling.

Basically, I think they were scared of this super-lame chart from B&N’s presentation:

Yesterday afternoon, Barnes & Noble sent a strong message to Amazon that it’s not about to give up the ghost, no matter how many Kindle accessory ads show up in the New York subway. As reported at Digital Daily, B&N has launched a 700,000 title ebook store (there are only 300,000 titles available for the Kindle, but more on that in a second) that is compatible with the iPhone, Blackberry, PC/Mac desktop, and the much anticipated Plastic Logic eReader.

So now Amazon has the Kindle, Borders has some sort of deal with Sony, and B&N has Plastic Logic . . . things are about to get a lot more interesting in the world of ebooks. Especially in terms of price points for devices and ebooks . . .

There are a few strange things about this announcement by B&N that jumped out at me. First off is this quote from the President of BN.com:

“Today marks the first phase of our digital strategy, which is rooted in the belief that readers should have access to the books in their digital library from any device, from anywhere, at any time,” said William J. Lynch, President of BN.com. “As America’s #1 bookstore and newsstand, our goal at Barnes & Noble is to build a service that revolves around the customer, enabling them to have access to hundreds of thousands of titles and read on their smartphone, PC, and many other existing and future devices. We want to make eBooks simple, accessible, affordable and convenient for everyone.”

As John Paczkowski pointed out in the aforementioned article, by “any device,” he actually means “any device except the Sony eReader, the Kindle, and any soon to be announced Apple device.” What pisses me off about this “business strategy” (don’t even get me started) is how short-sighted all these companies are being. From what I’ve heard in talking to some of the major publishers, ebook sales make up a miniscule portion of overall revenues. Like 3% small. Now rather than try and create a demand in readers for ebooks by working with a universal format (a la mp3s, which play on tons and tons of devices) and then profiting off of the creation of the best ebook store, or best ereader, everyone’s trying to create their own proprietary format to get you, as a customer, locked into their particular system. The existence of its proprietary format is one of the reasons there’s been so many cranky articles about the Kindle and the fact that you don’t really “own” the ebooks you buy, that, like in the case of Orwell’s 1984 and Animal Farm (irony well noted), they can just vanish from your device . . . But instead of putting the reader’s desires first, corporate bookseller/publishers once again demonstrate their contempt for their customers and their inability to rationally analyze what’s happened in the recent past to the music (not to mention TV and movie) industry . . .

Secondly, this 700,000 title number is pretty sketchy. From the B&N press release:

More than a half-million public domain books from Google, which can be downloaded for free. Readers can discover and explore this rich treasure trove, including everything from classic works by well-known writers to long-forgotten and obscure titles that are historically much harder to access.

So how many titles are actually for sale on the B&N ebook site? Oh, that’s right—approximately 200,000. Which is less than two-thirds of what Amazon has available for the Kindle. But please, don’t let me stand in the way of your “math” and hype—you’re right, your device is bigger, your site is the “World’s Largest eBookstore,” etc. Unfortunately, after downloading the B&N ereading program, I couldn’t find a single book I wanted to buy . . .

Over at ZDNet, there’s a really interesting chart at the bottom of their article on this announcement listing all the parts, players, and possible entrants of the “Device Value Chain,” “Platform,” and “Content Value Chain.” Very interesting . . .

Chad is selling our books in to Barnes & Noble this morning. Wish him luck. We need it.

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